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Class Action

Thousands of poor South Africans, who were duped out of what little they had in an “unlawful scam”, have been given judicial sanction to sue the culprits in a “class action”. Tania Broughton reports.

Jul 27, 2021
Tania Broughton
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The application was launched by the Stellenbosch Law Clinic against Lifestyle Direct Group International, and affiliated websites, after being inundated with complaints from loan seekers who had, since May 2015,  “signed up” for what they believed to be loans.

The law clinic said consumers were conned into believing they were applying for much-needed cash loans while, in fact, they received no money and ended up paying monthly instalments for “legal services”, which they neither wanted, nor received.

It said the 12 websites had used the same modus operandi to mislead customers into unwittingly signing agreements for “subscriptions”  with an initial fee of anything from R399 to R429 a month and then R99 for 12 months.

When providing their bank account details, the consumers said they thought they were applying for loans, not agreeing to debit orders and when they tried to cancel, they were “stonewalled”.

In considering the application, Judge Patrick Gamble, sitting in the Western Cape High Court, detailed the history of class actions in South Africa, noting that the “most celebrated'' was the silicosis case, in which mine workers affected by lung disease sought to recover compensation for occupational injuries.

He said class actions paved the way for access to justice for ordinary working people who would otherwise not be able to afford to litigate.

The Judge said a class action did not require every member to have an identical cause of action or seek identical relief and in this matter “the scheme appears to neatly fit into the commonality criteria”.

“If a class action is denied, similar, if not identical evidence, will have to be led in separate courts by each of the thousands of members of the class. 

“Given the relatively limited quantum involved individually, these cases would likely be spread across numerous regional and magisterial districts throughout  the country….it would be an inefficient and unnecessary waste of resources for both parties.”

He said the “class” was large, with relatively small claims, and there was a risk of multiple findings, at variance with each other, from different courts.

“Such an outcome is clearly not in the interests of justice,” he said.

Giving the nod to the class action, he also ruled that it should be run on an “opt out” rather than an “opt in” basis, meaning that all affected consumers would be automatically part of it, unless they specified otherwise.

A special master is to be appointed to attend to the “nuts and bolts”, including the verification of claims and disbursement of payments and the companies have been ordered to provide the law clinic with its customers' details.

In response to a bid by the Law Clinic for an interdict shutting down the businesses, owner Damien Malander, claimed that they had not been trading since April last year and he had “no appetite to revive the businesses”.

The Law Clinic put up evidence that this was not true and that it had accessed the Lifestyle Direct Group website “that very morning”.

Judge Gamble said he would take Malander at his word. But he recorded Malander’s  undertaking in the court order, cautioning him that he would “breach it at his peril”.


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